Sale of Goods Act, 1930Sale of Goods Act, 1930

A contract of sale of goods is a contract A contract of sale of goods is a contract whereby the seller transfers or agrees whereby the seller transfers or agrees to transfer the property in goods to the to transfer the property in goods to the buyer for a buyer for a priceprice. Sec.4(1). Sec.4(1)

There may be a contract of sale There may be a contract of sale between one part owner and another.between one part owner and another.

A contract of sale may be absolute or A contract of sale may be absolute or conditional.conditional.

Essentials of contract of saleEssentials of contract of sale

A contract (all essentials of valid contract A contract (all essentials of valid contract applicable)applicable)

Between two partiesBetween two parties To transfer or agree to transfer the To transfer or agree to transfer the

propertyproperty In goodsIn goods For a price, i.e. the consideration is money.For a price, i.e. the consideration is money.

Transfer of propertyTransfer of property

Transfer of property means transfer of Transfer of property means transfer of ownership. Mere transfer of possession ownership. Mere transfer of possession can not be termed as a sale.can not be termed as a sale.

Sec.2(11) ‘Property means general Sec.2(11) ‘Property means general property in goods and not merely a property in goods and not merely a special property.’special property.’

General property means all ownership General property means all ownership rights and special property means rights and special property means limited rights.limited rights.

GoodsGoods

Sec.2(7). ‘Goods means every kind of Sec.2(7). ‘Goods means every kind of movablemovable property other than property other than actionable claims and money, and actionable claims and money, and includes stock and shares, growing includes stock and shares, growing crops, grass, and things attached to crops, grass, and things attached to or forming part of the land which are or forming part of the land which are agreed to be severed before sale or agreed to be severed before sale or under contract of sale.’under contract of sale.’

Kind of goodsKind of goods Existing goods- Sec.6(1) these are the goods Existing goods- Sec.6(1) these are the goods

which are in existence and are physically which are in existence and are physically present in the sellers possession. They are present in the sellers possession. They are further classified asfurther classified as

Specific goods- 2(14) – these are the goods Specific goods- 2(14) – these are the goods identified and agreed upon identified and agreed upon at the timeat the time the the contract is made.contract is made.

Ascertained goods- these are identified Ascertained goods- these are identified afterafter the formation of the contract. the formation of the contract.

Unascertained goods- these are the goods Unascertained goods- these are the goods which are which are not specifically identifiednot specifically identified or agreed or agreed upon at the time of the contract of sale.upon at the time of the contract of sale.

Future goods -sec.2(6) and Contingent goods Future goods -sec.2(6) and Contingent goods 6(2)6(2)

Price considerationPrice consideration

The consideration for the contract of The consideration for the contract of sale must be money. If goods are sale must be money. If goods are exchanged against goods the exchanged against goods the transaction is barter and not covered transaction is barter and not covered by the act. However consideration may by the act. However consideration may be partly in money and partly in goods. be partly in money and partly in goods.

NO SPECIAL FORMALITIES ARE REQUIRED NO SPECIAL FORMALITIES ARE REQUIRED FOR CONTRACT OF SALE. IT MAY BE IN FOR CONTRACT OF SALE. IT MAY BE IN WRITING OR ORAL OR IMPLIED. WRITING OR ORAL OR IMPLIED.

Sale and agreement to saleSale and agreement to sale

When property is transferred from When property is transferred from seller to buyer at the time of seller to buyer at the time of formation of contract, an absolute formation of contract, an absolute sale occurs.sale occurs.

When property in the goods is to be When property in the goods is to be transferred at some future date and transferred at some future date and not at the time of contract, the not at the time of contract, the contract of sale is termed as an contract of sale is termed as an agreement to sell. agreement to sell.

Points of distinction- sale and Points of distinction- sale and agreement to sell.agreement to sell.

Nature of contract-Nature of contract-executed / executory.executed / executory.

Transfer of property- Transfer of property- immediate / future date.immediate / future date.

Nature of rights of buyer- Nature of rights of buyer- jus in rem / jus in jus in rem / jus in personempersonem

Rights of buyer in case of Rights of buyer in case of breach-recovery of breach-recovery of goods, specific goods, specific performance / Damages.performance / Damages.

Risk of loss- buyer’s / Risk of loss- buyer’s / seller’sseller’s

Rights of seller in case of Rights of seller in case of breach-suit for the price breach-suit for the price of goods / Damages.of goods / Damages.

Right to resell- not Right to resell- not available. / may resale available. / may resale but liable for damages.but liable for damages.

Insolvency of seller- Insolvency of seller- buyer can recover goods / buyer can recover goods / if price already paid if price already paid proportionate amount can proportionate amount can be recovered.be recovered.

Insolvency of buyer- if Insolvency of buyer- if price is not paid price is not paid proportionate amount can proportionate amount can be recovered. delivery of be recovered. delivery of goods can be demanded./ goods can be demanded./ seller can refuse delivery seller can refuse delivery unless full price is paid.unless full price is paid.

Subject matter of contract of sale-Subject matter of contract of sale-Goods.Goods.

Goods may be classified as :-Goods may be classified as :-

1.1. Existing Goods- a) specific goods, b) Existing Goods- a) specific goods, b) ascertained goods, c) unascertained goods.ascertained goods, c) unascertained goods.

2.2. Future goods- which do not exist with the Future goods- which do not exist with the seller at the time of sale. the contract thus seller at the time of sale. the contract thus is an agreement to sell.is an agreement to sell.

3.3. Contingent goods – a type of future goods, Contingent goods – a type of future goods, the acquisition of which depends upon a the acquisition of which depends upon a contingency which may or may not happen. contingency which may or may not happen.

Perishing of goodsPerishing of goods

The possible causes of perishing of The possible causes of perishing of goods:-goods:-

1.1. Physical destruction of goods.Physical destruction of goods.

2.2. Damage of goods in such a manner Damage of goods in such a manner that they loose their commercial that they loose their commercial value.value.

3.3. Loss of goods by theft.Loss of goods by theft.

4.4. Lawful acquisition of goods by Lawful acquisition of goods by government.government.

Effect of perishing of goodsEffect of perishing of goods

Goods perishing before formation of the Goods perishing before formation of the contract.- in case of specific goods such contract.- in case of specific goods such contract is void contract is void ab initio ab initio as the performance of the contract is impossible due to destruction of subject matter.

Goods perishing before the sale but after Goods perishing before the sale but after the agreement to sell.:- in case of specific the agreement to sell.:- in case of specific goods the contract of sale becomes void goods the contract of sale becomes void and both parties are excused from the and both parties are excused from the performance. (Sec.8)performance. (Sec.8)

Effect of perishing of goods…Effect of perishing of goods…

Effect of perishing of future goods.:- Effect of perishing of future goods.:- Sec.8 applies in this case also which Sec.8 applies in this case also which says ‘where there is an agreement to says ‘where there is an agreement to sell specific goods, and subsequently sell specific goods, and subsequently the goods without any fault on the part the goods without any fault on the part of the seller or buyer perish or become of the seller or buyer perish or become so damaged as no longer to answer to so damaged as no longer to answer to their description in the agreement their description in the agreement before the risk passes to the buyer, before the risk passes to the buyer, the agreement is thereby avoided.’ the agreement is thereby avoided.’

PricePrice

Sec.2(10) defines the price as ‘the Sec.2(10) defines the price as ‘the money consideration for the sale of money consideration for the sale of goods.’goods.’

Price has to be in terms of money.Price has to be in terms of money. All monitory payments do not All monitory payments do not

amount to price.amount to price.

Fixing the priceFixing the price

Price is mentioned in the contract.Price is mentioned in the contract. The manner of fixing the price is The manner of fixing the price is

mentioned in the contract.mentioned in the contract. It is determined by the course of It is determined by the course of

dealings of the parties. when price is dealings of the parties. when price is not fixed by any of the above modes not fixed by any of the above modes a ‘reasonable price’ is considered as a ‘reasonable price’ is considered as the price of the contract.the price of the contract.

Time Time When time is stipulated regarding the When time is stipulated regarding the

payment of price :- Time of payment is not payment of price :- Time of payment is not considered the essence of the contract considered the essence of the contract unless unless a different intention appearsa different intention appears from the terms of from the terms of the contract. Thus if payment is not made in the contract. Thus if payment is not made in time the seller can not avoid the contract but time the seller can not avoid the contract but can claim damages.can claim damages.

When time is stipulated regarding delivery of When time is stipulated regarding delivery of goods:- time of delivery of goods is normally goods:- time of delivery of goods is normally considered essence of the contract. Thus non considered essence of the contract. Thus non performance at stipulated time will render the performance at stipulated time will render the contract voidable at the option of the buyer. contract voidable at the option of the buyer.